Remittances are the money that immigrants send to their families and communities abroad. Remittances are primarily utilized to support households overseas, respond to emergencies or celebrate the holidays. The total value of remittances has increased steadily over the past decade. According to the World Bank, outbound remittances from the United States totaled over US$48 billon in 2009, while remittances from the United States to Mexico alone accounted for US$22 billion. 1 In total, remittances sent across the globe totaled over US$325 billion in 2010.

For years, traditional money transfer services (non banks) were the primary vehicle for immigrants to send money to their relatives abroad. In the last ten years, banks have made significant inroads and are now capturing a growing share of the remittance market. According to a study conducted by Bendixen Associates in 2008, 26 percent of Latin American remitters usually sent money to their family via banks and credit unions. The great news is that this figure is on the rise and remitters are turning more toward financial institutions to conduct all of their financial needs, including remittances.

Today, there are a plethora of remittance options that are available, including sending money through remittance companies, online service providers, prepaid card solutions, and financial institutions. With so many options, remitters need to know what to look for in a remittance partner.

Money Transfer Companies

Money transfer companies have traditionally dominated the remittance market. In fact, as much as 50 to 60 percent of Latin American remittances are sent through this method. While these companies have adapted to the needs of remitters by offering convenient locations and hours, they tend to charge higher fees per transaction and less favorable exchange rates.

Financial Intuitions

Financial institutions have entered this market in the last decade and face heavy competition from the remittance companies. In 2001, financial institutions began accepting government issued ID card – Matricula Consular – as a primary form of identification to open bank accounts. This helped pave the way for financial institutions to compete in the remittance market.

The biggest challenge faced by financial institutions is that many Latin American immigrants are leery of banks and prefer to keep their money at home. An FDIC press release from December 2, 2009, highlighted that one in every four households in the United States are considered unbanked or underbanked. In addition, the study showed that 24% of all Hispanic households are unbanked. It has been a slow process, yet U.S. financial institutions that work with Latin American banks are beginning to expand banking access to the poor and rural populations of several countries.

There are many factors to consider when selecting a remittance partner including fees, limitations on fund transfers, customer service, relationship benefits and corporate responsibility.

Various Fees

Fees vary from company to company. Remitters should ask companies for a complete disclosure of information on costs. For example, is there an account set-up fee? What is the transfer fee? What is today's exchange rate? Are there additional fees charged (as a percentage of amount sent) when a remittance exceeds a specific amount


Companies have various limitations when it comes to sending money. Based on their personal needs, remitters may want to know how quickly the money will get to their beneficiaries and how much they can send at one time.

Customer Service

Remitters should look for companies that have a designated 800-number for customer service and offer various channels for sending money, including in person counters/tellers, online or through a phone bank. Remitters also want to look for institutions that deploy innovative platforms that improve speed and security of their money transfer.

Relationship Benefits

Establishing a relationship with a financial institution can provide a number of additional benefits for immigrants. Many financial institutions offer reduced or even waived remittances fees for customers who have an established relationship.

Financial Literacy

Financial literacy is key to helping immigrants succeed financially. Remitters should select a company that offers free (and not product-based) financial literacy to raise awareness about money matters and inform them of their consumer rights involving remittance and financial transactions.

Community Support

Remitters should request information on the level of engagement that the institution they select has with their community. Do they support organizations and events that are geared to help their community succeed? Do they truly care about their community or are they only interested in selling them a service?

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